We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

In financial markets, the price is everything and it is determined largely by supply and demand. Information about who owns an asset and who wants to buy that asset is a key driver of the price. In the equity market for example, traders will often focus on things like where the money is flowing and what ‘insiders’ like hedge funds and pension funds are doing with their equity holdings. This level of detail is easily obtainable and if the transaction is large enough, the details of transacting parties are reported to the market.

This level of transparency is not only useful for market regulators, it also provides insights that will often affect sentiment towards a stock and influence other market participants.

Bitcoin ownership is not transparent

When it comes to bitcoin and other cryptocurrencies, however, the opposite appears to be true. Many see the lack of transparency and complete anonymity of ownership as a positive attribute.

In a digital world where hacking and cybercrime is always a threat, those with a sizeable hoard of digital coins appear keen to keep a low profile not to become a target. They may hold a number of wallets, so the risk is spread. The technology and processing of cybercurrencies also supports anonymity – the blockchain ledger that records each and every transaction does not display names or details of the participants, meaning they are essentially anonymous.

This is a clear concern for governments, with the US Internal Revenue Service (IRS) declaring that in 2015 only, 802 individuals claimed profits or losses in relation to bitcoin transactions. That could change soon though, with startups such as Chainalysis creating software which tracks transactions and offers greater insight on who is buying and selling bitcoins to tax authorities, police and banks. That may be the start of increased transparency in the cryptocurrency market, although it will take time to resemble more mainstream markets like equities and other exchange traded instruments, if indeed it ever gets that far.

Bitcoin is now being covered by a handful of investment bank analysts, and if we see momentum build towards more efficient bitcoin processing, in turn leading to wider acceptance from retailers and a less dominant position for PayPal, this may be the point when bitcoin really comes onto the institutional fund's radars as an alternative investment.

Apparent broadening participation in the bitcoin market

A great way to understand the level of anonymity is to view the ‘Top 100 Bitcoin Addresses’ on websites like 99Bitcoins. Here we see the bitcoin address and the number of bitcoins held but not the holder’s identity. The address with the largest level of holdings globally is Bitfinex, which holds close to 500,000 coins (0.699% of all bitcoins). These are held on behalf of its thousands of clients, which in-turn are not made public.

The website BitcoinRichList suggests that the top 100 bitcoin addresses own around 17% of all bitcoins. This figure stood closer to 20% in August 2016, so one can assume that the ensuing 800% rally in prices since then has seen some larger holders taking profits amid increased and broadening participation.

Well-known bitcoin owners

Aside from the raft of celebrities who have talked up their involvement in bitcoin, we have seen some well-known entrepreneurs and businessmen speak out about their sizeable exposure to bitcoin. The biggest of these are Cameron and Tyler Winklevoss, who once said they owned 1% of all bitcoins. That would be around 1.65 million at the current level that has been mined. Remember that Bitfinex is the largest holder of bitcoins with less than 500,000 coins, so if the Winklevoss brothers still have this level of exposure, it must be spread over many accounts. Bitcoin creator, Satoshi Nakamoto, would also have spread his holdings over multiple accounts.

Many of the other big holders of bitcoins tend to be involved in the in the creation or mining of the digital currency, or else in running an exchange or a payment system. Names like Tony Gallippi, the Chairman of virtual currency processor Bitpay, who is said to have $20 million invested in bitcoin, or Dave Carlson, a software engineer who set up bitcoin mining company MegaBigPower. Mr Carlson had been speculated as earning $8 million per month at one stage.

The fact that little is known about who actually holds bitcoins is down to the blockchain technology itself. Some see this as a drawcard and like the privacy bitcoin offers, while others are less enthusiastic.

Bitcoin trading

You don’t need to own cryptocurrencies to trade
on them.
Find out more about trading on bitcoin with IG.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

CFDS are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

The information on this site is not directed at residents of the United States and Belgium, or any particular country outside Switzerland and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.